Abstract

Contemporary microfinance has been taken to task over a number of possible failings. At the same time insight into grassroots microfinance institution (MFI) failure is lacking. To that end this paper seeks to articulate and explain different stakeholder narratives about how a once promising Zambian microfinance institution actually failed while seeking to become a for-profit MFI. There are presently few in-depth studies of failed MFIs in those countries where microfinance is still emerging, just as it is in sub-Saharan Africa (SSA), and greater focus upon high profile performers in South Asia and Latin America, which leaves other developments in regions such as SSA much less represented. Using field data from Zambia this study examines the failure of Promotion of Rural Initiatives and Development Enterprises (PRIDE Zambia, hereafter PZ) initiative. It finds poorly practiced governance and accountability mechanisms, and unstable relationships between international donors and the Board, the Board and CEO and with middle management, to be central to its final failure. The study also reveals a lack of transparency and disregard for moral obligations, and poses serious questions about how it and its finances were managed and accounted for, even while this MFI still provided much needed financial services to the poor and vulnerable clients.